Will Hybrid Coating Technologies Inc (OTCMKTS:HCTI) Stop Crashing?
We are now 7 days into October and the lack of any announcements coming from Hybrid Coating Technologies Inc (OTCMKTS:HCTI) is having a disastrous effect on the performance of the company’s stock. For the last three sessions the ticker has been hurtling down the chart wiping huge portions of its value. Yesterday it closed nearly 25% in the red at $0.004.
Before the end of September HCTI was supposed to announce the execution of a definitive agreement with its Fortune 500 Partner and many investors jumped into the stock in anticipation. With the company issuing no further updates since the August 12 PR the uncertainty could be driving the same investors away.
It is safe to say that the hype generated by the announcement was the major force pushing HCTI up the chart because the financial state of the company is quite bleak. The latest financial report covers the quarter ended June 30 and back then HCTI had:
• NO cash or current assets
• $1.6 million in intangibles
• $6.8 million in current liabilities
• $4 thousand revenues
• $735 thousand net loss
With zero current assets, massive working capital deficit and accumulated deficit of over $25 million it is obvious that the company is facing some serious troubles.
Unfortunately the red flags run far deeper. Since the start of the year the shareholders of the company have been put through a crushing amount of dilution. The outstanding shares ballooned from 44.1 million to over 336 million as of August 26. Nearly all of the new shares were issued with heavy discounts to the market price – 114 million shares at $0.0021 and 128.8 million shares at $0.0018.
Recently HCTI increased their authorized shares from 640 million to 1.6 billion, which could mean that the dilution is going to continue for quite a while. Especially when you take into account the fact that the company is still relying primarily on convertible debt to fund its operations – in July they sold a $20 thousand debenture convertible at 50% of the lowest trading price for thirty days before conversion and a $52 thousand debenture convertible at a rate of 60% of the lowest closing price for the previous twenty days.
The rapid descent from the last couple of session could cause the stock to bounce but the risks surrounding it remain as serious as ever. Do extensive research and never put unaffordable sums of money on the line.
